Other Decision Reference 2023-0253

• Case Outcome: Rejected
• Year: 2023
• Date: 17 November 2023
• Reference: 2023-0253
• Subject Matter: Other
• Finantial Sector: Insurance
• Conducts Complained Of: Maladministration,Complaint handling (Consumer Protection Code) , Delayed or inadequate communication

Decision Ref:

2023-0253

Sector:

Insurance

Product / Service:

Other

Conduct(s) complained of:

Maladministration

Delayed or inadequate communication

Complaint handling (Consumer Protection Code)

Outcome:

Rejected

LEGALLY BINDING DECISION OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN

The Complainant, a limited company trading as a stationery and office supplies store,

hereinafter ‘the Complainant Company’, held a Professional Insurance Policy with the

Provider. The policy term in which this complaint falls, is from 23 September 2019 to 22

September 2020.

This complaint concerns the Provider’s decision to decline the Complainant Company’s

business interruption claim and then subsequently admit the claim, only for the first

“lockdown” period experienced by the Complainant Company.

The Complainant Company’s Case

The Complainant Company says that by way of its Representative, it notified the Provider

by email on 24 April 2020 of a claim for business interruption losses it sustained due to

measures imposed by the Government to help curb the spread of coronavirus (COVID-19),

as follows:

“The business premises closed temporarily in mid-March 2020 due to government

restrictions. [Complainant Company] is still conducting some online business and

delivering, however, business income has significantly reduced. The premises is now

used as a delivery drop-off point”.

In making its claim, the Complainant Company relied upon the following wording of the

‘Property – Business interruption (specialist retail)’ section of its Professional Insurance

Policy Document:

- 2 -

/Cont’d…

“We will insure you for your financial losses and any other items specified in the

schedule, resulting solely and directly from an interruption to your business caused

by:

…

Public authority

7. your inability to use the business premises due to restrictions imposed by a public

authority during the period of insurance following: …

b. an occurrence of a notifiable human disease within one mile of the business

premises”.

The Complainant Company says that following its assessment, the Provider emailed on 3

July 2020 to advise that it was declining indemnity on the basis that there had not been an

occurrence of COVID-19 at, or within one mile of, the Complainant Company’s business

premises and separately, that the financial losses suffered did not result solely and directly

from an interruption to the business caused by an insured peril, in that the safety

measures imposed by the Government and the economic slowdown resulted in there

being more than once cause for the loss.

The Complainant Company says that the Provider adopted a “blanket strategy of denial”

and that the reasons it gave for declining the claim were “unfounded” and “excuses”.

The Complainant Company says that following the U.K. Supreme Court decision in The

Financial Conduct Authority v. Arch Insurance (UK) Ltd & others [2021] UKSC 1, the

Provider emailed the Complainant Company’s Representative on 17 February 2021 to

confirm that it would admit the claim. The Provider subsequently made an interim

payment of €5,000.00 to the Complainant Company in April 2021, pending the outcome of

its Loss Adjustor’s calculation of the claim.

The Complainant Company says that the Loss Adjustor later advised its Representative by

email on 20 May 2021 that it had calculated the business interruption loss for the 8-week

period of closure from 24 March to 18 May 2020, to be in the amount of €10,060.00 (ten

thousand and sixty Euro).

The Complainant Company says that the claim settlement figure of €10,060.00 does not

accurately reflect, and falls a long way short of, the business interruption losses it incurred.

The Complainant Company say that apart from the first period of lockdown from 26 March

to 18 May 2020, “the shop has been open, mostly for essential services only”. It says the

Provider has admitted its business interruption claim only for the period from 24 March to

18 May 2020, when its retail premises were closed to the public, despite the Complainant

Company continuing to suffer a significant reduction in its turnover thereafter, including

significant losses during the other levels of restrictions.